Bolivia's President Evo Morales wants to launch state-run paper and cement ventures and develop lithium, petrochemical and iron projects in his second term but a lack of foreign investment and know-how could hamper his ambitious plans.

Leftist Morales won 63 percent of the vote in an election on Sunday to run the energy-rich but economically poor Andean nation for a second term, according to quick count tabulations. Official results were due later on Monday.

In his first term, Morales nationalized the natural gas industry, the country's top export earner, forcing foreign firms such as Spain's Repsol and Brazil's Petrobras to hand a larger share of revenues to the Bolivian state.

He also took over mining and telecommunication companies and launched a government-run airline and a daily newspaper.

The government has said it now controls 28 percent of the economy, up from about eight percent before Morales took office, and is eyeing a 40 percent role in the near future.

Morales is negotiating the acquisition of a majority stake in three power generation companies, two of which are controlled by Britain's Rurelec PLC and France's GDF Suez.

He has vowed to use his five-year second term to build large hydroelectric dams; launch cement, paper, dairy, sugar and drug companies; and develop petrochemical, iron and lithium industries to allow Bolivia to export value-added products.

Although the landlocked country has the second-largest deposits of natural gas in South America after Venezuela and massive reserves of lithium and iron, it has failed to develop a strong economy from its natural wealth and most consumer goods are imported.

Bringing know-how
Finance Minister Luis Alberto Arce acknowledges the government cannot develop large-scale projects without outside help.

“Foreign investors have two advantages, they could bring the know-how and the cash … (they would be welcomed) to invest in strategic sectors if they have an expertise that we don't have,” he told reporters in an interview on Friday.

“We'd like to do it on our own, but we can't,” he said.

Morales, an Aymara Indian who herded llamas as a boy, has said large-scale projects would allow him to boost social welfare programs. Cash handouts to encourage school attendance, to the elderly and to young mothers have reached 2.5 million Bolivians, about a quarter of the population, this year.

“Thanks to the nationalisations … we can pay stipends and subsidies,” Morales said in a campaign meeting in the northern Pando region last week.

Although critics have accused Morales of buying voter support with subsidies, Arce insisted they are spurring economic growth.

Analysts say Morales' moves to give the state a bigger role in the economy have deterred foreign investors, preventing Bolivia from honoring pledges to increase natural gas output.

“They told us that the natural gas sector was going to fuel revenue growth, but instead we are losing markets … It remains to be seen whether there will be resources to finance these huge projects,” said analyst Gonzalo Chavez.

Between 2006 and 2008, foreign companies invested an average of $383m a year in Bolivia, less than half what they invested between 1998 and 2000. Arce said sales of natural gas to Brazil, which buys the bulk of Bolivia's energy production, fell this year by 22 percent to 24 million cubic meters a day.

However, Bolivia hopes to boost natural gas exports to Argentina, thanks in part a consortium led by oil major Repsol, which has pledged to invest $1.5bn in Bolivia.

Morales last week lamented that the lack of foreign investment prevented Bolivia from developing an industry to refine natural gas into other by-products and acknowledged that he needs to lure investors to the landlocked country.

“How to guarantee these projects, how to guarantee investments, that's the responsibility of the state. That's another challenge,” he said.

Morales is a fierce critic of capitalism and blames foreign companies for ransacking Bolivia's natural resources, but some analysts say he will likely to be less radical in his second term.

“The government … now wants to attract more investments to develop (the hydrocarbons and mining sectors). As a result, it will probably be careful not to adopt excessively aggressive measures that could lead to the departure of foreign investors,” said the New York-based Eurasia Group.